Tuesday, October 24, 2006

The Priceless MRI

Last year my son needed an MRI of his knee to evaluate a suspected ligament injury. Because I have a high-deductible health plan and because I am such a cheapie, my first question was, how much?

So I called the place where the physician told us to go for the MRI, but they couldn’t tell me the price. So I called two other providers on my insurance company’s in-network list, but they couldn’t tell me the price either. So I called my insurance company. They told me their pricing agreements with providers are confidential, and only the providers could give me the pricing information. When I explained I had already tried that route, they told me that I shouldn’t worry about it because MRIs were a covered service.

After I got super bitchy with all involved parties, I finally got one provider to tell me that the price might be around $1000. Well a might is better than an ‘I don’t know’ or an “I can’t tell you because it’s confidential,’ so that $1000 place got our business.

Of course, once the claim was processed, all the pricing information was printed right on the explanation of benefits form I received. Confidential, my ass! ($1000 my ass, too!)

Problem: PCL tear, ? medial meniscus tear
Diagnostic test requested: MRI left knee

Provider: Shields MRI, Cambridge, MA
Charged: $1,550 (MRI) + $250 (interpretation)

Insurer: Anthem Blue Cross/Blue Shield
Allowed: $444 (MRI) + $99 (interpretation)
As this true story demonstrates, most healthcare providers will not tell you in advance what their charge for a particular service is going to be. Even if you can wrestle a dollar amount from them, the information may be meaningless if you are insured and the provider is ‘in network.’ That’s because the amount the provider has agreed to accept as payment in full from your insurance company (the ‘allowed amount’) is probably much less than the provider’s actual charge. Under most insurance plans, you can not be made to pay the difference between the allowed amount and an in-network provider’s actual charge. (The same generally does not hold true for providers who are out-of-network; they can hit you for their total charge.)

Why does all this matter? Well, because if you don’t know how much something costs, how can you be expected to be a wise consumer of healthcare? Think about it. If big box retailer #1 is selling a TV for $500 and big box retailer #2, right down the road, is selling the same TV for $400, retailer #2 is going to get your business, right? (I am going to assume you said yes.) Applying this same concept to healthcare only makes sense. If healthcare provider A charges $500 for a procedure and healthcare provider B charges $400 for the same procedure, assuming similar quality and convenience (driving distance, etc.), it only makes sense to get the procedure from provider B.

Now, I hope you aren’t saying, “But why should I care if my insurance company pays for it regardless?” You should care even if the money doesn’t seem to come directly out of your pocket because you’ll end up paying for it eventually in the form of higher insurance premiums or decreased benefits. After all, most insurance companies are not in business because they care about your wellbeing; they are just out to make a buck.

So, what’s the solution? We need to demand transparency in healthcare pricing. Healthcare services should be forced to carry a price sticker, just like every other consumer good. The veil of secrecy shrouding pricing ‘deals’ between healthcare providers and insurers also needs to be lifted, so that patients know the allowed amount, which is all the insurance company will shell out for a service, regardless of the actual charge. I’m thinking that the more people who push providers and insurers to release this information, the more likely they will be to release it. Some providers and insurers have started to do this, but not nearly enough.

A few final notes, just to complicate matters…While I think transparency in pricing is vital, I do concede that placing an exact price tag on some procedures is impossible. For example, hospital charges for surgical procedures are largely based on time spent in the operating room, something that is impossible to determine in advance. In such cases, the best we might be able to know is the average price for all xyz surgeries the hospital performed in the past year. (The allowed amounts for such procedures are typically based on diagnosis and patient characteristics.) Another issue is that along with price, you also should consider quality. A cheap, but crappy TV is no bargain. Likewise, a cheap but shoddy medical procedure is no bargain. There are several sources of general healthcare quality information (some free, some not), but more information is needed in this area as well.

So, do I think that pricing transparency is going to solve the problem of runaway healthcare costs? No, but it may help a little. Plus, if you think about it, you wouldn’t buy a house or a car or a TV or even a loaf of bread without knowing the price at the time of sale, so it seems ridiculous to think that you should be clueless when you ‘purchase’ an elective medical procedure.

For more on this topic, check out what Biomed Tim has written on his blog here and here and a related article from the Wall Street Journal here.


We now return to our regularly-scheduled programming of nonsense, sarcasm and off-color humor.

7 comments:

Crankster said...

Personally, I'm pinning my hopes on medical tourism--this crap really pisses me off. Thanks for the clear, lucid analysis, Parlancheq!

guillem said...

It´s very hard, I suppose, in case of disease to have the sensation to begin from zero. Really isn´t a protection or security sensation. The suscriber´s part, is a legal obligation. The Company´s part is "beneficence". But in Europe, we continue imitating US in everything.I say it by the "tobacco´s war" in it´s summit here. This war (already old in US) I have always tought is due to it
"ready" that they are the insurers: less smokers, less cancer of lung for example. Of course, in Europe makes the same Social Security. The private companies not even must bother themselves: SS transfers them many patients. Ergo, SS pays and subventiones private hospitals.
I´ll say a hugueness: in power´s matter, everything what itsn´t Capitalism, is catholicism one and privillege.
And the Opus Dei has opened "branch" in Lexington Ave.
Can we imagine its insurance subject?
The indomitable Guillem.

Isabella Snow said...

Kiss condoms - An excellent way to ensure you don't get laid in my bed.

Nina said...

Cost of Healthcare is crazy. Even more disgusting is when you have things like an MRI and then it is not even looked at.

My cowork injured her back, had a MRI and was concerned that the specialist had evaluated an older pre-injury film. Upon many questions, the specialist admitted he usually just reads the written report to make a diagnosis and looks at the MRI if things don't "appear" conclusive.

Needless to say, she’s pissed. I’m thinking she’ll be even more angry once she runs out of pain meds.

slaghammer said...

The more contact you have with the health care profession, the more frustrated you will become. The system is not set up for people who ask questions about the business end of the deal. There is no incentive for the system to change. Where else are you going to go?

ShadowFalcon said...

This is when I'm even more greatful for the free healthcare over here.

PARLANCHEQ said...

Crankster: Hmm, next will be air ambulances that can whisk people overseas for emergency treatment. 95% of people will die on route, but those who make it will get quality care at cut-rate prices. ;)

Guillem: Hard to say what the best system is...private or socialized medicine. Probably both have some problems.

Isabella Snow: Ah, so no kisses for KISS? ;)

Nina: Ugh! Kind of defeats the purpose of going to a specialist if he isn't going to use his specialized knowledge to review the MRIs, etc!

Slaghammer: Well, depending on insurance coverage, you may be able to choose your doctor or hospital.

Shadow Falcon: You're lucky to not have to worry about prices!